There is a great deal of buzz about Africa’s economic awakening, with some countries experiencing double-digit growth in gross domestic product that is being driven by waves of foreign capital, as investors from Asia, Europe, North America, the Middle East and also Latin America descend on the continent. Many of the investors are after natural resources, mineral and oil riches and also farmland. This raises the question: is the foreign investment benefitting the continent or is it just another scramble for Africa, the last stage of colonialism? This, the first in series of six articles, Billionaires at play in the fields of the poor, investigates how foreign investment is playing out in one small African country. It looks at five billionaire investors, their big investments and at what’s in it all for Sierra Leone.
Part 1. Sierra Leone on a silver platter?
Africans and their leaders have every reason to be fed up with the negative way their continent has been portrayed and viewed by the outside world. It is definitely time that they tried to undo the damage by painting pictures that highlight the continent’s many strengths and riches.
So it was that in late 2009, Sierra Leone’s President Ernest Bai Koroma took the podium at the Sierra Leone Trade and Investment Forum at the Queen Elizabeth II Conference Centre in London, England. The country was still better known internationally for “blood diamonds” and a brutal civil war they fuelled, than for its impressive peace-building efforts in the ten years since the war ended. President Koroma wanted to change that.
“Our soils are fertile and our land under-cultivated, offering ideal investments in rice, oil palm, cocoa, coffee and sugar,” he declared. “Our ground is rich in minerals: iron ore – the third largest deposit in the world; bauxite, rutile, gold and yes, diamonds. Our shores boast 400 kilometres of white sandy beaches, just waiting to be developed for tourism . . . Our seas are some of the most well-stocked and under-fished in the world”.
This effort to reshape his country’s global image was commendable. But it is telling that rather than focus on his country’s remarkable resilience, reconciliation and reconstruction after the war, and the diverse wealth of natural and cultural resources that contributed to the country’s healing process, the very resources that could be harnessed to develop the country from the farm up, President Koroma’s opening address sounded very much like an invitation to investors to come to Sierra Leone to help themselves. One European participant at the Forum in London commented that it looked as if Sierra Leone itself was being handed to investors “on a silver platter”.
When he was first elected in 2007, President Ernest Bai Koroma declared that he wanted to run the country “like a business concern”. His business-friendly ideology seems to have been music to the ears of neo-liberal advisors and international financial institutions working with the Sierra Leonean government to promote their recipe for development. This included top-down prescriptions involving privatisation, deregulation, privation of the public sector and generous perks and incentives for the private one, particularly direct foreign investors.
A year after Koroma’s election, former British Prime Minister’s Tony Blair’s African Governance Initiative began working inside the Government of Sierra Leone, with a team of up to ten advisors in “key government institutions”, including the Office of the President and the Sierra Leone Investment and Export Promotion Agency (SLIEPA).[i]
The World Bank Group, the European Union (EU) and the British Department for International Development (DFID) threw their support behind SLIEPA, which developed policies to lure investors to the country, including generous tax giveaways and other fiscal incentives. The World Bank’s International Finance Corporation (IFC) chipped in with two “hired guns” to scout out land available for oil palm and sugar plantations, and they were also centre-stage at the London conference.[ii]
It was SLIEPA that organized the Sierra Leone Trade and Investment Forum, which it did with a great deal of assistance from some youngsters sent out by Tony Blair’s African Governance Initiative, and with financial support from the European Union, DFID and the IFC. Among the luminaries in attendance were the Prince of Wales, Tony Blair and a host of ultra wealthy investors, some reportedly personally invited by Blair.
And so began the push to attract investors from all over the world to bring about a veritable rush for the riches of Sierra Leone.
A “wealth of benefits” for investors
With the numerous World Bank, EU and DFID advisors and experts placed strategically inside the government and a donor push to put public money into the private sector through “public private partnerships”, it is hardly surprising that the government of Sierra Leone took the neo-liberal bait and began to promote foreign investment like the panacea that would deliver the country from poverty. Soon, Sierra Leone was being lauded for the protection it offered foreign investors as a member of the World Bank’s Multilateral Investment Guarantee Agency (MIGA), which deters the government from doing anything to endanger investor profits. It has also been rising rapidly on the World Bank Group’s annual ranking of nations based on the ease of doing business and its business climate. The World Bank now ranks Sierra Leone 32nd of 185 nations for investor protection.[iii] Foreign investors then use this World Bank report card, with its assurances of investor protection and generous tax incentives, when they are soliciting financing.
SLIEPA boasts that ”all agribusiness investors in Sierra Leone receive a wealth of benefits”,[iv] including 100 percent foreign ownership and repatriation of all profits, dividends and royalties, the ”attractive tax rates with 0% taxes and duties”, “flexible labour regulation”, and some of the lowest labour rates in the world at 25 US cents per hour — as it goes about wooing foreign investors as if the mineral resources, farmland and beaches were infinite. [v]
While Chinese companies are becoming increasingly important in the country, having been promised access to land and mineral resources, sometimes in exchange for large infrastructure projects, other very large investors are corporate groups from Europe and India, each targeting a different Sierra Leonean resource.
Sierra Leoneans might be very surprised to learn that the personal wealth of five men linked with five of the largest foreign investors in their country is not to be calculated in thousands, or hundreds of thousands, or millions or even hundreds of millions of dollars. Rather, it’s in the thousands of millions of dollars; the net worth of just five of the country’s largest foreign investors is more than 16 billion dollars – that’s more than seven times the country’s Gross Domestic Product.
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[i] Tony Blair African Governance Initiative, Sierra Leone. http://www.africagovernance.org/africa/pages/sierra-leone/ [accessed 22 March 2013]
[ii] Joan Baxter. ‘Protecting the investors, but what about the people? Dissecting the contradictions of agricultural investment in Sierra Leone,’ Pambazuka News, Issue 480, 6 May 2010. http://www.pambazuka.org/en/category/features/64224 [accessed 22 March 2013]
[iii] International Finance Corporation (IFC), The World Bank. ‘Ease of Doing Business in Sierra Leone 2013’. http://www.doingbusiness.org/data/exploreeconomies/sierra-leone?topic=protecting-investors [accessed 18 March 2013]
[iv] Sierra Leone Investment and Export Promotion Agency (SLIEPA), ‘Sierra Leone Investment Outreach Campaign: opportunities for investors in the oil palm sector,’ 21 April 2010. p 30. http://www.investsierraleone.biz/index.php?p=52&pn=Downloads&1=1&l=english&pn=Downloads [accessed 31 March 2013]